Falling markets, rising prices, financial insecurity. How to negotiate this maze of challenges in the 65th year of India’s Independence. HT tells. Understand the big picture

1. Get a grip Understand what your money streams are --- where your incomes come from and where your expenses lie. Also put together a list of all your assets, from fixed deposits to stocks. Do not include the house you live in, that’s not an asset, it is your home. This is your starting point.

2. Know your goals Get clarity on when you would need how much money to buy a house, pay for children’s education or your retirement and work backwards to see whether the income streams you have are adequate. If yes, get going on your plan. If not, either try to increase your income or reduce expenses. Either way, get a financial planner.

3. Protect what you have As long as your investments do not deliver an income, through rentals, interest or dividends, your most powerful asset is the income you bring home every month. So, buy a term policy that gives you the maximum protection for your life. Whatever other assets you create protect them as well --- a house, for instance, with a householder’s policy. Finally, as health costs rise, be sure to have adequate health insurance for the entire family.

4.Manage debt effectively When you borrow to buy an appreciating asset, like a house, it will work in your favour. In an inflationary environment, leveraging an EMI to pay for a house is good, provided it doesn’t get in the way of your other goals. But when you borrow to finance holidays, consumer durables or a second car, understand what you’re paying. An unpaid credit card debt means you will end up paying an interest rate of upto 50% per annum.

5.Create wealth The earlier your start the better. If you invest Rs 5,000 a month in an equity fund for the first 10 years of your working life and then stop putting additional funds but allow it to grow at an assumed rate of 15% per annum, you will, at the end of 30 years have a corpus of almost Rs 2 crore. But if you start 10 years later, invest double the money (Rs 10,000 a month) for double the time (20 years) at the same rate in the same product, you will end up with Rs 1.2 crore. The biggest risk of investing is not investing.

6.Make a will Even if you are single person with no dependents but want your money to go to a charity after you pass on, make a will and get it registered. If you do have dependents, divide the will according to how much proportion you want each person to get. Like wealth creation, passing the wealth to the next generation must be done as early as possible --- nobody can predict a meeting with death.